Cathay Pacific profits dive

Cathay Pacific will be hit by the global slowdown

Cathay Pacific's profits fell 39% in the first half of the year - and it has warned there is no sign of improvement for Asia's airline markets.

The Hong Kong based airline's share price slumped to its lowest close since April 1999.

Cathay Pacific reported net profits of HK$1.32bn in the six months to June 30, compared to 2.18bn in the same period of last year.

A contraction in cargo shipments caused by the global economic slowdown and weaker yields on passenger routes were responsible for the poor profits, which were weaker than analysts had expected.

'No real signs of recovery'

"At present we can see no real signs of potential recovery in the Asian air passenger and freight markets and indeed the situation may worsen before it improves," said Cathay chairman James Hughes-Hallett.

A work-to-rule by pilots which led to hundreds of flights being cancelled in July has cost $350m, the airline said. The impact on Cathay's accounts will not be seen until the end of the year.

The airline's finance director, Robert Atkinson, said the airline was "not incurring any further impact" from the dispute.

The Hong Kong Aircrew Officers Association, which represents the majority of Cathay pilots, says the work to rule is continuing. However flights are substantially back to normal.

Investors face dividend cut

Presenting its first half results, Cathay said cargo tonnage was 5% down on the first six months of 2000.

Passenger numbers were up by 2.3%, but yields fell because of a 8.6% expansion in capacity.

"The outlook for the airline in the second half will remain uncertain and difficult," said Mr Hughes-Hallet.

Shareholders faced a hefty cut in the interim dividend pay out, which Cathay reduced to 12.5 cents from 20 cents last year.

Cathay's shares closed on Wednesday at their lowest level since April 1999, down 4.95%, at HK$9.60.

The Hang Seng index fell 0.4% to close at 11,958.01, its lowest close in more than two years.